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LOWER UNEMPLOYMENT RATE MISLEADING
by Sharon Rondeau
(Feb. 11, 2010) — The U.S. Bureau of Labor Statistics has reported that the unemployment rate fell from 10.0% in December to 9.7% in January. The decline was hailed by some analysts as the beginning of the end of the recession which began in December 2007.
However, Alan Greenspan, former Chairman of the Federal Reserve Bank, disagreed that the employment picture is improving in an interview with David Gregory on “Meet the Press.” Greenspan stated, “It’s very difficult to make the case that unemployment is coming down anytime soon.” His comment was based on the fact that the BLS had claimed an increase of 784,000 jobs in January which Greenspan said “didn’t happen.”
While the “unexpected” decline in unemployment appeared encouraging, “there are some measurement changes that affected the number,” according to Business Insider. There were fewer unemployment claims filed, but those who are out of work have been unemployed for a longer period of time. In December the average time a worker was unemployed was 29.1 weeks; in January it was 30.2.
According to The Main Street Business Journal, which focuses on the Mountain West, the unemployment rate in Washington County, UT has increased to 8.7%, up from 6.1% one year ago, and the overall state unemployment figure increased in January to 6.7% from 6.3% in December. In nearly all available labor reports published for January 2010, there is consensus that over 8,400,000 jobs have been lost during “the Great Recession.”
The Brookings Institution is reporting that for the second consecutive month, the Bureau of Labor Statistics employer survey shows a 20,000 drop in payrolls, while, though small, had been predicted to show a gain in January and is the statistic most closely tracked by investors. Overall, there has been “a bigger loss in private payrolls during the recession than was first estimated.” Worker productivity rose due to employers maintaining output while eliminating jobs. Brookings maintains that “this strategy has taken a heavy toll on American workers and job seekers…U.S. employers have been very fast to slash payrolls in the face of perceived weaknesses in current and future demand…”
In the housing sector, home foreclosures were down 10% from December but are expected to increase dramatically over the next few months as modification programs either expire or fail to help homeowners remain in their homes.